The purpose of this research is to examine initial status and change in everyday cognitive competence for two samples of elderly at risk of cognitive impairment or suffering from low levels of cognitive functioning: 1) Low educated, nondemented elderly who may be cognitively challenged as a result of socioeconomic reasons: and 2) community- dwelling Alzheimer's patients, cognitively challenged due to neurological impairment. Everyday cognitive competence is defined as the ability to perform cognitively complex tasks of daily living. Competence is integral to one's ability to function independently and effectively in our society. Loss of everyday competence is the cardinal diagnostic feature of dementia (American Psychiatric Association, 1987). Although of importance in the study of both normal and cognitively impaired elderly, everyday competence is rarely assessed directly. Evaluation of functioning in everyday contexts has been limited to self-report, reports of family, and the clinician's rating based on cursory observations in a clinical setting. A unique contribution of the study is the objective assessment of the elderly's competence to perform tasks of daily living that involve higher-order cognitive abilities. This study includes the further development of a version of the Everyday Problems Test (EPT) for use with cognitively challenged older adults, that assesses everyday competence in seven domain of daily activities (taking medications, using a phone, managing finances, preparing food, using transportation, shopping for necessities, and maintaining a household). Study 1 is a measurement study concerned with establishment of the psychometric properties, item characteristics, and validity of the EPT for the two cognitively challenged groups. Study 2 examines initial status and change in everyday competence will be assessed over multiple occasions, and risk factors associated with low levels of functioning and with decline in competence will be examined. The samples are drawn from three ongoing clinical longitudinal studies. Use of samples from multiple research sites permits comparison of the rate of change in both a representative sample of low educated nondemented elderly, and in a well characterized and sufficiently large group of Alzheimer's patients.